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Earnings forecast revisions and securities prices evolution in the Tunisian stock market

Ahmed Bouteska (Faculty of Economics and Management of Tunis, Tunis El Manar University, Tunis, Tunisia)
Boutheina Regaieg (Faculty of Law, Economics and Management of Jendouba, University of Jendouba, Jendouba, Tunisia)

Review of Behavioral Finance

ISSN: 1940-5979

Article publication date: 24 June 2019

Issue publication date: 24 June 2019




The purpose of this paper is to investigate the effect of forecast earnings’ revision on the evolution of securities prices in the Tunisian stock market.


A portfolio study of investor reaction and stock prices following revisions is first conducted to highlight the existence of abnormal return related to analysts’ earnings revisions. Analysis is then supplemented by a second empirical investigation based on the panel data to quantify the effect of revision on the abnormal profitability of securities.


The evidence found in this paper validates the fundamental theoretical hypothesis according to which the psychological bias resulting from the effect of the forecast earnings revision is related to the abnormal profitability of the securities. The authors conclude the importance of the revision impact on investors’ behavior on one hand, and the informational content of the analysts’ forecasts and the biases which they lead on the other hand.


Globally, the empirical illustrations largely validate the findings of behavioral models particularly that of Kormendi and Lippe (1987), Cornell and Letsman (1989), Beaver et al. (2008) which states that investors under psychological bias, react to the effect of forecast earnings revision by an abnormal variation in stock prices.



Bouteska, A. and Regaieg, B. (2019), "Earnings forecast revisions and securities prices evolution in the Tunisian stock market", Review of Behavioral Finance, Vol. 11 No. 2, pp. 165-187.



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